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As a seller, the law generally expects that the goods you sell match their description. Specifically, the goods should correspond to their description upon delivery when the buyer takes possession of them. This is a fundamental obligation you should take seriously as the seller. This article will explain the seller’s obligation to ensure the goods sold match their description in business-to-business agreements.
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What is My Obligation to Ensure Goods Match Their Description as a Seller?
The law says that, as a general rule, the seller of any goods sold by description must ensure the goods match the goods upon delivery. To unpack this, we need to understand the following.
What is a Sale by Description?
A sale by description is any sale where the buyer relies on some representation the seller makes that is related to the nature of the goods. Commonly, this includes goods displayed in advertisements. However, it would also include verbal exchanges between you and the buyer where you describe the goods available for sale.
The buyer must rely on your description for the sale to be a sale by description. Alternatively, if the buyer inspects the goods before the sale and purchases them based on their own judgment, this is not a sale by description. To clarify this distinction, consider the following examples.
| Sale by description | Not a sale by description |
| Suppose you are a wholesaler of computer hardware. You advertise the goods you sell in an IT trade publication, describing their technical components. The CIO of ABC Ltd contacts you to enquire about several pieces of the advertised hardware. Specifically, she asks if the hardware is compatible with a particular operating system. You confirm that it is. Accordingly, the CIO purchases the hardware. | The following month, you run another advertisement in the same trade publication to market the fact that you will join a roadshow to sell discounted used hardware. However, you do not refer to any particular items for sale. At the roadshow, you have a table of assorted used pieces of equipment. You have a sign that says, “sold as is.” An IT director from XYZ LLP asks you about the technical specs of a used computer monitor. You tell him you are not sure. However, the director decides to purchase the monitor anyway. |
What is Delivery?
In a contract for the sale of goods, delivery refers to the point at which the buyer takes possession of the goods. For any contract for the sale of goods by description, the seller must ensure the goods match their description at the point of delivery.
In a retail sales context, such as if you own a shop, delivery will be at the point of sale. However, if your customer’s order involves shipping the goods to the customer, delivery is at the point the goods reach the customer.
Are Their Exceptions to the Seller’s Obligation to Ensure Goods Match Their Description?
In most business-to-business sales, you are free to expressly contract out of the obligation to ensure that the goods match their description. For instance, you are free to include an express term in a supply of goods contract that states you will not guarantee the description of the goods. Provided this is not an unfair contract term, you will not be liable if the goods do not match their description.
However, buyers may be unwilling to do business with you absent a guarantee. Therefore, the extent to which you can contract out of this obligation depends on your bargaining power with the buyer.
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What Happens If I Breach My Obligation to Ensure Goods Match Their Description?
Provided the contract obligates you to ensure the goods match their description, you will breach the contract if the goods do not. The law generally treats this form of contractual breach as a serious one.
Nevertheless, whether you will breach your obligation depends on any express terms governing the contract. Therefore, you should negotiate provisions in the contract that set out matters like:
- the degree to which the goods can vary from their description;
- what recourse the buyer has if the goods do not meet the description; and
- a term expressly specifying the description of the goods sold.
This will help you minimise your liability and the risk of any dispute emerging.
Key Takeaways
Absent express terms in a contract, the seller must ensure the goods sold match their description at the point of delivery. A sale by description is where the buyer has relied on some representation the seller makes that is related to the goods. A breach of this obligation is a fundamental breach of the contract that entitles the buyer, in most cases, to terminate the agreement. Specifically, they may be able to refuse to accept the goods and demand a refund. Likewise, the buyer can claim against you for damages.
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Frequently Asked Questions
Absent express terms in a contract, the law obligates sellers to ensure the goods sold match their description at the point of delivery.
An unfair contract term is an exclusion clause which is too unreasonable to include in the context of the contract.
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